Oil Report

UPDATE 1-Huge plantings, record crop to push U.S. corn supplies to 33-year high - USDA

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CHICAGO, May 12 (Reuters) - U.S. corn supplies will rise to their highest in 33 years due to massive plantings and what is expected to be a record crop - a bounty so big that it will outweigh export demand and increased ethanol usage as the biofuel sector recovers from the impact of the coronavirus pandemic, the U.S. government said on Tuesday.

The U.S. Agriculture Department, in its first forecast for the 2020/21 marketing year based on its March plantings outlook of 97 million acres, pegged corn stocks at a massive 3.318 billion bushels. If realized, that will be the fourth biggest ever and the largest stockpile since the 1987/88 marketing year.

“To be honest, it doesn’t really matter if the corn carry out is 3.2 billion (bushels), or 3.7 billion, it’s just too much corn,” said Charlie Sernatinger, global head of grain future at ED&F Man Capital.

The corn market shrugged off the report, however, with the benchmark Chicago Board of Trade July futures contract turning higher after the figures were released as traders had already priced in a huge stockpile.

On the demand side, USDA predicted corn exports of 2.150 billion in 2020/21, up 375 million bushels from 2019/20.

Corn used by the ethanol sector will rise to 5.2 billion bushels in 2020/21, rebounding from the seven-year low of 1.775 billion bushels expected in 2019/20 but still well below the all-time high of 5.605 billion bushels.

“They’re optimistic on their corn demand for next year given all we know right now, although overall demand should rebound in the coming year as the economy starts to open up,” said Jack Scoville, vice president at Price Futures Group.

USDA also raised its outlook for 2019/20 corn stocks to 2.098 billion bushels from its April forecast of 2.092 billion bushels.

USDA projected 2020/21 soybean ending stocks at 405 million bushels and 2020/21 wheat ending stocks at 909 million bushels. For 2019/20, it raised its soybean stocks view to 580 million bushels, cutting its export forecast by 100 million bushels from its April outlook, and bumped its wheat ending stocks view to 978 million bushels from 970 million bushels.

Wheat futures sank to their lowest in more than a week after the report was released and soybean futures dropped to session lows. (Reporting by Mark Weinraub Editing by Alistair Bell)